Chapter 1_a material helpful to some.pdf
- 2. 1-2 Quote . . . “Without a strategy the organization is like a ship without a rudder, going around in circles.” Joel Ross and Michael Kami
- 3. 1-3 Military influences in strategy u “Strategos” referred to a general in command of an army u The art of the general è By 450 B.C. it came to mean managerial skill è By 330 B.C. it referred to the skill of employing forces to overcome positions to create a system of global governance u Carl von Clausewitz “tactics…(involve) the use of armed forces in the engagement, strategy (is) the use of engagements for the object of war” 1838 On War Formation and development of business strategy
- 4. 1-4 Academic influences in strategy u 1911 Scientific management (Taylor) – Still in place today (UPS), some consider it micromanaging u HBS requires a class in Business Policy in 1912 u Adam Smith’s “invisible hand” (the market) gives way to Alfred Sloan (GM CEO from 1923-1946) concept of the “visible hand”—middle manager u Chester Bernard influential book “The Executive” argues that managers should pay attention to “strategic factors” u Ronald Coase’s 1937 article “why firms exist” (Nobel Prize in economics) and Joseph Schumpter’s concept of “disruptive technologies” written in 1942 bring in organizational economics u Max Weber warns against bureaucratic organizations but sees a shift toward this way of organizing Formation and development of business strategy
- 5. 1-5 Recent influences in strategy u 1960s (Strategy and structure; Corporate Strategy) n 1963 Harvard business conference leads to SWOT analysis n BCG founded in 1963 “strategy boutique” l Created the portfolio analysis n Stars, dogs, cash cows, question marks u 1980s (Porter’s 5 forces) u 1990s (Resource based view of the firm) Formation and development of business strategy
- 6. 1-6 Formation and development of business strategy Ø 1911: it was taught at Harvard University with the name “The policy of enterprise”. Ø 1911-1960: it was applied. Ø 1960s-1970s: it was actually applied into enterprises and taught in universities. Ø Currently, it was taught in all universities related to economics and business.
- 7. 1-7 What is strategy? Ø “Strategy is what an organization must make based on their strength and weaknesses in context with all the opportunities and threats” (Kenneth Andrew, The concept of corporate strategy) Ø “Strategy is the process to identify the long-term objectives, select methods or processes of action and allocate necessary resources to achieve the goals” (Alfred Chandler, Strategy and structure). Ø “Strategy is to determine the allocation of available resources to change the competitive balance and move competitive advantage to their side” (Boston Consulting Group –BCG). Ø “Strategy to cope with competition is the combination of objectives needed to achieve and means that enterprises need to find to achieve the goals (Michael Porter).
- 8. 1-8 Intended, Emergent & Realized Strategies Intended Strategies Realized Strategies Deliberate Strategies Emergent Strategies Unrealized Strategies Thus, strategy can emerge from “a Pattern in the stream of decisions or actions”
- 9. 1-9 Intended, Emergent & Realized Strategies Company’s realized strategy is the product of whatever planned (intended strategies) are actually put into action and of any unplanned strategies (emergent strategies)
- 10. 1-10 What is strategic management? “Strategic management is the process of analysing the current and future situation of enterprises, planning objectives/goals, setting out the implementation and monitoring the implementation to achieve the goals/objectives”
- 11. 1-11 Process of strategic management 1. Strategic goals/ objectives a.Externa l analysis b. Identifying opportunities and Threats c. Internal analysis d. Identifying strengths and weaknesses 4. Implementing strategy 3. Analysis and Strategic choice 5. Controlling, evaluating and adjusting strategy 2. External and Internal Analysis (SWOT) Strategy formulation Strategy Implementation Strategy Control
- 12. 1-12 Strategy vs. Strategic Management u Strategy v A series of goal- directed decisions and actions matching an organization’s skills and resources with the opportunities and threats in its environment u Strategic management v Analyze current situation v Develop appropriate strategies v Put strategies into action v Evaluate, modify, or change strategy
- 13. 1-13 1-13 Strategic Management Process uStep 1: Identifying the organization's strategic goals and objectives v Organization philosophy v Mission v Vision v Long and short range objectives/Goals: the foundation for further planning 13
- 14. 1-14 Organization’s Philosophy Organizational Philosophy establishes the values, beliefs and guidelines for the manner in which the organization is going to conduct its business. -> relationship between the organization and its stakeholders
- 15. 1-15 Organization’s Mission/Vision Ø Organizational mission: v line or lines of business, v products and services v the markets Ø Strategic vision: Involves thinking strategically about v Future of company v Where are we going?
- 16. 1-16 Mission Vs. Strategic Vision u A mission statement focuses on current business activities -- “who we are and what we do” v Current product and service offerings v Customer needs being served v Technological and business capabilities u A strategic vision concerns a firm’s future business path - - “where we are going” v Markets to be pursued v Future technology- product-customer focus v Kind of company management is trying to create
- 17. 1-17 Empower people through great software anytime, anyplace, and on any device. Microsoft Corporation Examples of Missions
- 18. 1-18 - Value proposition: Empowerment to achieve more (its information technology products provide empowerment to customers). - Target market: All persons and organizations in the global market (maximize market penetration to reach all potential users of the company’s computing products) Microsoft Corporation Examples of Missions
- 19. 1-19 Examples of Vision To help people and businesses throughout the world realize their full potential Microsoft Corporation
- 20. 1-20 Long and Short-range Objectives Ø Long-range objectives: v results desired in pursuing the organization’s mission v extend beyond the current fiscal year Ø Short-range objectives: èperformance targets èless than one year’s duration
- 21. 1-21 Strategic Management Process (cont’d) Step 2: Conducting external and internal analysis Ø External analysis: v The environmental scanning of specific and general environments v Focuses on identifying opportunities and threats Ø Internal analysis: v Assessing organisational resources, capabilities, activities and culture: o Strengths (core competencies) create value for the customer and strengthen the competitive position of the firm. o Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage. ècalled SWOT analysis
- 22. 1-22 u Step 3: Analysis and strategic choice v Develop and evaluate strategic alternatives v Select appropriate strategies for all levels in the organisation that provide relative advantage over competitors v Match organisational strengths to environmental opportunities v Correct weaknesses and guard against threats Strategic Management Process (cont’d)
- 23. 1-23 u Step 4: Implementing strategies v Designing organizational structure v Designing control systems o Market and output controls o Bureaucratic controls o Control through organizational culture o Rewards and incentives v Matching strategy, structure, and controls o Congruence (fit) among strategy, structure, and controls u Step 5: Controlling, evaluating and adjusting strategy v How effective have strategies been? v What adjustments, if any, are necessary? Strategic Management Process (cont’d) Structure Strategy Controls
- 24. 1-24 Hierarchy of Strategies Ø Levels of strategy-making in a diversified company . Corporate Strategy Business Strategies Functional Strategies Two-Way Influence Corporate-Level Managers Business-Level Managers Functional Managers Two-Way Influence
- 25. 1-25 Hierarchy of Strategies Ø Levels of strategy-making in a single-business company . Business Strategy Two-Way Influence Functional Strategies Business-Level Managers Functional Managers
- 26. 1-26 Corporate-Level Strategies u Vertical integration u Diversification u Business portfolio restructuring
- 27. 1-27 Business-Level Strategies u Cost leadership è Attaining, then using the lowest total cost basis as a competitive advantage. u Differentiation è Using product features or services to distinguish the firm’s offerings from its competitors. u Focus è Concentrating competitively on a specific market segment.
- 28. 1-28 Functional-Level Strategies u Focus is on improving the effectiveness of operations within a company. è Manufacturing è Marketing è Materials management è Research and development è Human resources
- 29. 1-29 Global-Level Strategies u Multidomestic u Global u Transnational
- 30. 1-30 Strategic Management Process Analyzing Current Situation Deciding on Strategies Putting Strategies in Action Evaluating and Changing Strategies Situation Analysis Strategy Formulation Strategy Implementation Strategy Evaluation Chapter 1 Chapter 2 Chapter 3 External Analysis Internal Analysis Chapter 4 Chapter 5, 6 Chapter 7 Business-level Strategy Corporate-level; International Strategy Strategy Implementation